Survey findings point to best practices.
Sponsored by CO-OP Financial Services
As the payments industry undergoes change brought about by technological advancements, debit remains the second most frequently used form of payment behind cash. The U.S. debit card market accounts for approximately 70 billion transactions worth more than $2 trillion. Active debit cardholders use their cards nearly every day for purchases, to get cash from an ATM, to pay bills and for other activities that are critical to their financial lives. Those transactions, in addition to providing valuable non-interest credit union income, serve as a constant reminder of the relationship between the consumer and his or her primary financial institution, which is why credit unions must continue to keep a healthy debit portfolio top of mind.
As changing consumer behavior and competition from fintechs impact debit usage among members, credit unions will need to find ways to better understand and optimize their debit portfolios in order to drive penetration, activation and usage.
Earlier this year, CO-OP Financial Services and Mastercard commissioned a survey of 240 leaders from credit unions of various asset sizes and geographic regions to identify the strategies they are using to optimize their debit portfolio.
Here were a few things we learned:
A Healthy Debit Portfolio Goes Beyond Issuance and Activation
While credit unions are making great strides to put cards in their members’ hands through tactics like instant issuance (63 percent of respondents are currently offering or plan to offer instant debit card issuance), they must also focus on engaging members to incent usage and drive non-interest income.
Debit card rewards programs are becoming an increasingly effective way to do this. More than half (55 percent) of the credit unions surveyed are actively using or considering adding debit loyalty rewards programs as they not only help to drive continuous engagement and potential cross-sell opportunities but also provide a competitive edge against larger credit card issuers that only focus on credit.
Mobile is also a critical channel for increasing debit usage. More than half (55 percent) of credit unions surveyed reported an increase in the enrollment of debit cards through their mobile wallets and 53 percent reported an increase in mobile debit transactions within the last 12 months. Encouraging mobile-friendly members to load their debit card information into their phones helps ensure top-of-wallet status for common debit transactions like paying bills or transferring money. Almost two thirds (61 percent) of respondents said that competition from mobile payment services like Google and PayPal will significantly influence debit card usage, making top-of-wallet status all the more critical.
Marketing Your Strengths
Active marketing across digital and non-digital channels is critical to communicating the benefits of credit union membership and debit product features. Step one begins with identifying your target audience. For instance, this survey revealed that lower income earners and younger adults had higher debit card usage and were therefore a prime target for marketing campaigns. From there, you can customize your outreach tactics based on where your audience is most active.
Debit card controls are a great way to market your credit union’s strengths in a less intrusive way, by giving members the power to control their spending and monitor for fraudulent activity through the convenience of digital channels. Just over 40 percent of respondents are currently offering card controls to their members.
Actively managing your portfolios starts with data analysis, strategy and tools to create the impacts you desire in consumer behavior.
Kathy Snider, Ph.D., is SVP/ATM/debit/prepaid/shared branch for CUES Supplier member CO-OP Financial Services, Rancho Cucamonga, Calif. She invites you to join CO-OP and Mercator Advisory Group for a live webinar, State of Debit: Findings From the 2018 U.S. Credit Union Debit Card Benchmark Survey," at 11 a.m. Pacific time, Thursday, Nov. 1. All attendees will receive an advance copy of the survey.